BREAKFAST DEALS: Foster's dough

SABMiller gets its finances in order to renew its tilt at Foster's but just how sweet is their revised takeover offer going to be? Rupert Murdoch says he's not going anywhere but the top job at News Corp will probably go to his right-hand man Chase Carey rather than James Murdoch and Foxtel's 'two-speed' result may bolster the case for its planned $2 billion merger with Austar. Meanwhile, Telstra may put the NBN deal to its shareholders without the ACCC's approval, Bluescope Steel could cut jobs as economic woes bite and BHP Billiton and Nyrstar fail to see eye to eye on Lundin. Elsewhere, Copper Energy is in talks with suitors as its board faces the wrath of an angry shareholder and Macquarie Capital heads to the Caribbean.

Foster's, SABMiller

Signs that Foster's suitor SABMiller is getting ready to return to the fray are getting clearer and just a day after reports that the global brewer is set to renew its assault on Foster's with a slightly sweeter offer, there is now talk that it is close to securing a multi-billion-dollar syndicated loan. According to Reuters, the acquisition loan could well be one of the biggest deals of the year and is expected to be green-lighted despite the volatility in the global markets. Market gyrations, which have seen Foster's shares trade between $4.51 share to $4.90 share this week, have tested the faith of many with regard to whether SABMiller would be willing to re-engage with Foster's after launching a $4.90 a share offer in June. But SAB's interest has remained undiminished and it pretty much boils down to how much the volatility will affect the extent of SAB's revised bid. The suitor's original bid was never going to float Foster's boat and there has been curious silence between SAB and Foster's since then. A bid of around $5.50 was seen as a more realistic one before global markets went into turmoil, but with markets going on a rollercoaster ride those expectations have been tempered a bit. As mentioned earlier in this column, SAB always had the ability to sweeten its bid and it was always likely to wait until Foster's delivered its full-year results to renew its pitch. A $5.50 a share offer may not be forthcoming, but is not impossible either, although a $5.10 to $5.15 a share offer seems more realistic. That would certainly bring the Foster's board to the table but will be unlikely to seal a deal. An eventual outcome may well hinge on just how bad the numbers are in Foster's annual results, to be presented on August 23. The target's shareholders may not be putting pressure on Foster's board just yet but unimpressive numbers, a better offer on the table and fears that the share price would take a hammering if SAB walks will all be on their mind. SAB will no doubt look to exploit those concerns.

Rupert Murdoch, Chase Carey, News Corporation, Sky Italia

With News Corporation posting solid full-year results the media conglomerate has at least managed to insulate most of the damage from the phone hacking scandal in the UK – and those expecting to see a contrite, weakened Rupert Murdoch were disappointed by the media mogul's commitment to stay on top for as long as possible. The one important thing to note from Murdoch's answers to analysts was that his right-hand man Chase Carey is looking more and more likely to be the man to replace him when the time comes. This is the first real indication from the media mogul that his son James Murdoch's position as heir apparent is not set in stone. James might have made all the right moves during the public grilling he and his father were subjected to on the hacking scandal but many say that the hacking occurred under his watch and the reputational damage will linger for some time. In fact, we still have to wait and see how successful James is going to be in his attempts to defend the allegations of misleading a UK parliamentary select committee investigating the scandal. For the time being Rupert Murdoch has made it quite clear that he isn't going anywhere in a hurry, and even if he did, Carey would be the man most likely to hold the fort until James or any of his siblings is ready to take the reins.

Meanwhile, it looks like the man installed to replace Rebekah Brooks as head of News International, Tom Mockridge, is himself at risk of getting embroiled in a hacking scandal. This time the allegations aren't about invasion of privacy but rather about corporate espionage. According to The Australian Financial Review, Italian prosecutors have alleged that a computer hacker recruited by a former Scotland Yard officer working for News Corp and paid by News International caused damage to a rival of Sky Italia. For now, there is no allegation that Mockridge was aware of the hacking. Mockridge moved from Sky Italia to New International in July and has been replaced by Andrea Zappia.

Foxtel, Austar United

One man who was seen as a likely successor to Mockridge at Sky Italia was Foxtel's boss Kim Williams, who yesterday delivered what he describes as a 'two-speed' result. Foxtel's earnings rose by 15.5 per cent in the year to June 30 but total subscriber growth for the period was a paltry 1.2 per cent. Any growth at a time when consumers are locking up their wallets is a positive, but the thing is that while support from existing customers is solid finding new ones is getting harder. The numbers certainly bolster Foxtel's argument to the Australian Competition and Consumer Commission that the $2 billion deal with Austar is the best way for pay TV operators to tackle the tough conditions in a competitive market. The regulator doesn't quite see it that way and the submissions from the likes of Optus and iiNet aren't helping Foxtel's cause. According to The Australian, Optus has expressed concern that the deal would allow Telstra to exploit its 50 per cent ownership of Foxtel to hinder competition and give the telco preferential access to Foxtel's content, while iiNet is worried that the purchasing power of the proposed new entity could limit smaller rivals' ability to access content. However, Williams is quite upbeat about the situation, saying that he is confident that the comprehensive response to the ACCC's concerns will do the trick. If not, it can always start eating into Austar's share of the regional market.

Meanwhile, Telstra's shareholders were no doubt happy to see the telco's full year results despite the fact that their hopes of seeing a special dividend or a major buyback have been dashed by the current market volatility. At least they can feel secure in the fact that their 28 cents a share dividend is still intact and will remain so, The other thing they can potentially look forward to is voting on the $11 billion NBN deal, which Telstra boss David Thodey said could be placed before them at the annual meeting on October 18, with or without ACCC's approval. However, Thodey added that a final decision on that will be made two weeks before the annual meeting.

Bluescope Steel

With the latest jobs data fuelling expectations of a rate cut by the Reserve Bank of Australia, Bluescope Steel's latest market update is not going to make for pleasant reading for the Gillard government. The nation's biggest steelmaker has flagged that that it expects to writedown the value of assets in its coated industrial products and distribution units by about $900 million. It also warned that it is mulling the potential halving of its domestic production and stop exports. All of this pretty much means a lot of people are going to lose their jobs at the worst possible time. Bluescope stressed that no decision has been made on the production cut but a high Australian dollar, higher material costs and low prices are causing serious grief for the company. Curiously, there was no reference to the proposed carbon tax, something that the steelmaker has been critical of since day one.

BHP Billiton, Lundin Mining, Nyrstar

It would seem talks of BHP Billiton's interest in Canada's Lundin Mining were not far off the mark after all, but a deal may not be forthcoming. According to Bloomberg, BHP and its partner Nyrstar have failed to reach an agreement on the nature of their joint bid. The talks reportedly ended last week and there are no signs that they are going to revived. Zinc producer Nyrstar is chasing a number of Lundin's assets but can't afford to buy Lundin on its own. The only thing BHP would be interested in is Lundin's 24 per cent stake in the Tenke Fungurume copper mine in Democratic Republic of Congo, which is operated by Freeport McMoran. That's the only asset that fits BHP's bill but the mining giant has plenty of good assets at the moment and isn't really in the habit of buying minority stakes.

Wrapping up

Cooper Energy has revealed that it is in talks with a number of parties interested in merging or taking over the company. Now there is a reason why it has been so forthcoming with the information, Cooper's board is under threat from an angry shareholder, Edward Smith. The board has now told its other shareholders that Smith's actions threaten to disrupt any merger talks. Cooper has appointed Euroz Securities as an adviser on the proposals. Meanwhile, the AFR reports that Macquarie Capital has teamed up with the airport division of Spanish construction group Ferrovial to take a look at the privatisation of the Caribbean's busiest airport, the Luis Muoz Marn International Airport in Puerto Rico. Elsewhere, the ACCC has backtracked on its decision to block Japan's Asahi Holdings from buying P&N Beverages Australia, saying that it's satisfied by P&N's decision to spin its cordial and drinks unit into a new company, Tru Blu Beverages. The regulator blocked the deal in March and said that P&N would need to divest the unit simultaneously with Asahi's acquisition to get the regulatory nod. Asahi is buying the rest of the business for $188 million. Finally, fast-food king Jack Cowin's food empire is reportedly under threat, with the AFR reporting that he is facing the prospect of losing a third of his KFC stores in West Australia from October, as his legal wrangles with brand's owner Yum International continue. Cowin reportedly has until the first of October to sell 14 off his outlets to Yum or have his license revoked. The food mogul, who is a director at Ten Network and the owner of Hungry Jacks, is estimated to be worth $618 million.